The year 2022 ended with the landmark drilling of oil in the northern part of the country and coupled with other developments during the outgoing year, next year is expected to be a year full of activities for the sector.
Nigeria is set to be among leading countries in oil and gas in 2023, especially, with eight estimated new projects.
Africa’s large chunk of oil exploration activity is predicted to take place in Nigeria, where developments such as the Bonga South West deepwater, expected to soon reach final investment decision. The Nigerian National Petroleum Company Limited (NNPCL), which is spearheading this drive has signed key deepwater oil exploration with operating major oil companies in the country.
The group chief executive officer of the company, Mallam Mele Kyari, forecasts that the country’s oil production would rebound to 1.8 million barrels per day (bpd) by the end of the year and to increase further in 2023.“Output could reach 1.8 million bpd by the end of December, but hopefully by the end of November, up from 1.45million bpd now, with a further increase to 2.2 million bpd any time from the middle of next year,” he added.Infrastructure issues, pipeline leaks and oil theft have squeezed Nigeria’s output this year, leaving the country consistently below its Organisation of Petroleum Exporting Countries (OPEC) output targets. Nigeria’s submission to the OPEC Secretariat put September crude oil output at just 938,000 bpd, just over half its quota for the month, while total liquids production was only 1.14 million bpd.
Nigeria produced 1.17 million bpd of crude in September, 40,000 bpd higher than in August. The discrepancy is partly down to differences in the classification of the Agbami grade as crude or condensate.Improved security conditions and contract terms are helping to restore interest in Nigeria’s upstream sector from international oil firms, Kyari said, adding that, the Petroleum Industry Act (PIA) of 2021 which laid the groundwork for fiscal, regulatory and legal reform would support the future investment plan.
President Muhammadu Buhari had given the oil ministry a mandate to ensure energy security and Kyari revealed recently that NNPC will deploy a protection model similar to Saudi oil giant Aramco’s to curb oil theft.If Nigeria is successful in increasing its oil production, it may again broach the subject of adjusting the baseline production figure that determines its quotas within the OPEC+ group.
Although Nigeria’s production fell below 1 million bpd in recent times, there have been some promising signs, with Forcados now back online.
The NNPC head was bullish about the possibility of new investments.The world is looking for energy, Kyari said, striking an upbeat tone on future LNG production from additional projects. NLNG, he stressed, is progressing with Train 7 with a target startup date of 2025.The NNPC head noted that NLNG shareholders were keen to add more capacity, with Train 8. There’s so much gas, the possibilities are endless, Kyari said.Similarly, as the country looks forward to boosting production, the NNPCL is keenly leading oil majors through Nigeria’s deepwater hydrocarbon potential. Already, the country has inked new production sharing contracts (PSCs) for six offshore licences with oil majors.
The execution of fully termed agreements for the renegotiated PSCs was revealed on 12 August 2022, less than a month after President Muhammadu Buhari launched on 19 July 2022, the Nigerian National Petroleum Company (NNPC), a development which saw the firm officially transiting into a limited liability entity as enshrined in the provisions of the Petroleum Industry Act (PIA) 2021.
Therefore, NNPC used the parties’ interest to renew the PSCs as they were due to expire to sign the renewed ones, which are expected to provide several benefits such as improved long-term relationships with contractors, elimination of contractual ambiguities, especially in relation to gas terms, and enable early contract renewal, amongst others.
During a signing ceremony, parties renewed their agreements in five oil Mining Leases (OMLs) 128, 130, 132,
133, and 138 a development that is anticipated to generate further investments in the upstream sector and boost investors’ confidence while also unlocking over $500 billion in revenue for the country.
These recently inked PSCs offer more opportunities for boosting Nigeria’s crude oil production and revenue base.
Commenting on this, Shell Nigeria country chair, Osagie Okunbor, described the execution of the OML 133 PSC contract as ‘a significant progress towards harnessing the deepwater resources of Nigeria.’
Richard Laing, ExxonMobil Nigeria Chairman/Managing Director pointed out that the renewal of the Usan and Erha leases validates ExxonMobil’s commitment to maintain a deepwater presence in Nigeria, through its subsidiary, Esso
Exploration and Production Nigeria.
The African Energy Chamber (AEC) has said that Nigeria’s crude oil production is expected to grow to 1.75 million barrels per day (bpd) in 2023.
According to AEC, Nigeria’s crude oil production is expected to grow from 1.65 million bpd in 2022 to about 1.75 million bpd in 2023.
Expanding Gas Output
Nigeria, Morocco, and their partners expect to make a final investment decision in 2023 on what would be the world’s longest offshore gas pipeline from Nigeria to Morocco and onto southern Europe.
The pipeline, expected to cost between $20 billion and $25 billion, is planned to run for 3,840 miles (5,600 kilometers) from Nigeria along the West African coast to Morocco before connecting with pipelines in Italy and Spain and potentially delivering more non-Russian gas to Europe.
Downstream
The year 2023 will possibly end petrol scarcity in Nigeria, based on ongoing investments that hopefully would come to fruition before end of Q3 of same year.
As 650,000 barrels Dangote refinery is scheduled to come on stream in the Q3, of 2023, the Federal Government has assured that petrol importation would end same year.
Minister of State for Petroleum Resources, Timipre Sylva said all necessary actions are being taken to actualise that.
A refurbished refinery in Port Harcourt in the Niger Delta is expected to be producing 60,000 barrels a day, bpd of refined crude oil per day by the end of next month, and the new Dangote refinery is expected to come online in the first quarter of next year.
Nigeria has been mostly unable to take advantage of high crude oil prices because it swaps crude oil for refined products which also saw a huge price jump this year.
Energy Transition
Emphasis in Nigeria’s electricity industry is shifting towards energy transition with focus on renewable energy.
Nigeria’s job growth in the decentralised renewable energy is expected to exceed 76,000 in 2023, up from 32,000 in 2019 and overtaking the oil and gas sector, by 2023.A report by Power for All, the global campaign to end energy poverty, in collaboration with Clean Technology Hub Nigeria, showed that Nigeria has built a strong market position in the area and is poised to reap the benefits.
According to the just-released document, the distributed renewables energy sector in Nigeria has been growing rapidly and delivering clean and affordable energy, particularly to remote rural communities and is now also a major source of good and stable jobs, nearly matching those in the county’s oil and gas sector.It includes the deployment of Solar Home Systems (SHS), which the report said currently employs 50,000 people compared to 65,000 in Nigeria’s oil and gas sector.Furthermore, the demand for clean energy products in the country, it said, is expected to create more than 76,000 new jobs by 2023. “This is over twice the number of jobs created in 2019 as reported in the powering jobs census 2019,” it added.The sector is further expected to grow following the recently launched Nigeria Energy Transition Plan which outlines the country’s ambitions and plans to achieve net-zero emissions by 2060, while also ending energy poverty, the report said.
“It demonstrates the health and viability of the distributed renewables energy sector to help not only accelerate the country’s energy access agenda but also to help alleviate unemployment, especially in rural areas,” said Power for All’s Director for Campaigns and Partnership, Suranjana Ghosh.The report, partly sponsored by the Rockefeller Foundation, is based on a survey of more than 350 companies across five countries: Ethiopia, India, Kenya, Nigeria, and Uganda.
“The country lost almost 2,000 decentralised renewable energy jobs in 2020 from short-term pandemic impacts. However, the sector bounced back strongly in 2021, registering approximately 50,000 jobs, nearly twice the number of jobs observed in 2020.“The demand for solar home systems products, which was already on a fast upward trajectory before the pandemic, was key to the rapid recovery and growth,” it added.
In another major initiative, the federal government is eyeing 11,000 megawatts of electricity supply by 2023 after signing an agreement with German multinational company Siemens to improve the country’s erratic power supply.
Under the roadmap, the German conglomerate will work with Nigeria’s power providers to modernize the country’s electricity grid and supply systems.
The roadmap is divided into four phases. Phase one and phase two of the agreement will focus on distribution and transmission issues in power supply.
Nigeria already has an installed supply capacity of 12,522 megawatts but currently has only an average 4,000 megawatts that reach consumers.
The roadmap is setting ambitions high with a target of 7,000 megawatts in 2021, just under two years from now.
Phase three and phase four of the roadmap involves actual power generation. Under the roadmap, the country will increase the capacity of the national grid to 25,000 megawatts.
Meanwhile the Nigerian Bulk Electricity Trading Plc, is working on an ambitious plan to increase power supply to 5, 500 Megawatts (MW) in 2023 to boost electricity in the country.